The longest U.S. government shutdown on record ended on 12 November, following a period in which key economic reports, such as non-farm payrolls and inflation, were suspended. With data releases now resuming, we can now gain fresh insight into the state of the U.S. economy, helping to inform the Federal Reserve’s next interest rate decision.

Across the waters, the Bank of England kept interest rates steady at 4.0%, with the decision passing by a 5–4 vote. This outcome aligned with market expectations. The Monetary Policy Committee noted that it believes CPI inflation has already peaked, a development that could pave the way for possible rate cuts in the future.

The benchmark 10-year U.S. Treasury yield declined by 6 basis points (bps), finishing the month at 4.02%. In Europe, yields moved in different directions: the German 10-year Bund rose by 6bps and the UK’s equivalent by 3bps, closing at 2.69% and 4.44%, respectively. In contrast, France’s 10-year yield edged down by 1basis point to end November at 3.41%.

Several notable developments unfolded in the local market. To begin with, the Minister of Finance delivered a well-received Medium Term Budget Policy Statement, reporting that tax revenues are outperforming expectations and that debt consolidation efforts remain on track. In addition, the National Treasury confirmed the formal adoption of a 3.0% inflation target, with a tolerance band of ±1%.

S&P Global Ratings also upgraded South Africa’s foreign-currency sovereign rating from BB- to BB, assigning a positive outlook. The agency attributed the upgrade to “improving growth and fiscal trajectory, alongside the reduction in contingent liabilities,” adding to upbeat sentiment in the domestic market and supporting asset prices.

Finally, on 20 November, the SARB’s Monetary Policy Committee unanimously cut the policy rate by 25 bps. The decision followed the newly adopted inflation target and reflected the MPC’s view that an improved inflation outlook provides scope for a less restrictive policy stance.

Local bond yields continued to decline with the short-dated R2030 falling 17 bps and the long-dated R2048 declining 52 bps. The FTSE/JSE All Bond Index (ALBI) delivered a total return of 3.4% in November, bringing the year-to-date return to 20.91%. The 12+ years and 7–12 years segments were the largest contributors to performance.

Inflation-linked bonds posted positive returns for the month as real yields declined on the back of increased demand for this asset class. The I2050 declined by 39 bps, with most of the gains coming from the mid- and long-dated segments of the yield curve. The FTSE/JSE Inflation-Linked Index (CILI) and the Government Inflation-Linked Bond Index (IGOV) recorded returns of 3.67% and 3.78%, respectively.

Money market rates continued to trend lower during the month of November. The 3-month JIBAR declined by 18 bps to 6.78%, while the 12-month JIBAR fell by 17 bps to 7.23%. Average yields on 6-month and 12-month Treasury Bills also continued to decline, falling by 15 bps to 7.17% and by 19 bps to 7.24%, respectively. The Alexander Forbes Short-Term Fixed Interest (STeFI) Composite Index delivered a 0.53% return for the month.

With just one month remaining in 2025, the rand has averaged R17.98/USD year to date which is stronger than last year’s average of R18.33/USD. Much of this gain stems from a weakening in the U.S. dollar. By month end, the rand closed around R17.11/USD, moderately stronger than October’s closing level.

Looking ahead, domestic economic fundamentals point to a lower yield environment over the medium term. Growth remains muted, while inflation is expected to stay contained. Although monetary policy should remain accommodative, it is unlikely to be overly aggressive, still leaving room for some downward pressure on yields. Nominal bonds continue to offer attractive value, both historically and relative to peers. Globally, conditions remain challenging amid persistent geopolitical uncertainty, and we remain cautious about the upward trend in Japanese bond yields.

We continue to follow a holistic investment approach anchored in macroeconomic fundamentals and responsive to evolving policy signals.